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TMI Blog2021 (1) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... e contractee. The applicant supplies, designs, installs, erect and commission SPGS for its customers. The SPGS installed by the applicant are in the form of Solar Rooftop Plant and Ground Mounted Solar Power Plant. The applicant had earlier filed an application for Advance Ruling dated 29.05.2018. But the issue on which ruling was sought was different from the issue at hand in this application. (i) The supply of Solar Power Generating System along with other goods and service of designing, erection, commissioning installation of the same is classified under SI no. 234 of Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no. 24/2018-Central Tax (Rate) dated 31.12.2018 and Si no. 38 inserted in Notification no. 11/2017-Central Tax (Rate) dated 28.6.2017 vide Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018. (ii) The supply of goods along with service of designing, erection, commissioning installation of Solar Power Generating System along with other goods is covered under SI No. 234 of Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and SI No. 38 ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C-AC Inverter. (i) Solar Charge Controller- Solar Charge Controller is technically known as a Charge controller. It determines how much power should be injected into the batteries for optimum performance. It measures the efficiency of the entire system as well as the operating life of the batteries. It also protects the battery bank from overcharging. Whenever a battery is used, a charge controller is also used to ensure longer battery life. (ii) DC to AC Inverter- The electrical energy generated by the Solar Panels is in Direct Current (hereinafter referred to as "DC") form. However, electrical appliances mostly function on Alternating Current (hereinafter referred to as "AC") form of electrical energy. Accordingly, a DC to AC solar inverter (also known as 'solar inverter') is used which converts the electrical energy generated in DC into AC so that electrical energy can be used by such appliances. Such conversion takes place with a minimal time gap. c) Battery Bank is an electro-chemical device containing Lead. It is a secondary battery used to store electrical energy by the means of oxidation- reduction (redox) reactions. Battery Bank can be charged both using Sola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, MCBs, energy load meters and LT panels are also installed and perform following functions: (i) MCB/MCCBs are used as circuit breakers after the inverter for protection of plant and for operation and maintenance activities. (ii) Energy meter is essential part of solar plant for energy measurement and billing purpose. (iii) LT panel is required to connect & combine the inverter output power. Further, the energy meter and MCB/MCCB's are installed in LT panel. The aforementioned components are completely movable and connected with cables with each other for the operation of the entire SPGS. These can be installed using nuts bolts in the civil structure, for wobble free operations. B Ground Mounted Solar Power Plant (Grid Connected): Ground mounted Solar Power Plant is not different from relatively smaller Solar Rooftop Power Plant. They both generate solar power in a similar manner. The main difference between Solar Rooftop Plant and Ground Mounted Solar Power Plant lies in a way the solar power energy is consumed. As in the case of rooftop solar, the power generated is mostly consumed at the same site (say the house or the office/commercial building), with any small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r plant. Usually Main, Check and Standby i.e. 3 energy meters are installed in any utility solar power plant as per the CERC guidelines in India. (viii) Utility Grid: The energy generated from the solar power plant is transmitted to the consumers through the transmission line network commonly known as utility grid. Various voltage level of the utility grid depending on the size of the plant like 11 kV, 33 kV, 66 kV, 110 kV, 132 kV, 220 kV, 400 kV, 765 kV, etc exists in India. Transmission line conductor with insulators and the transmission line towers combines together to form the utility grid. (ix) Other components like energy meters, circuit breakers, cables etc. are also required to be connected for functioning of the entire system. Overview of proposed contract structure for SPGS 2. The Applicant has proposed to enter into a turnkey contract for setting up of SPGS which includes supply of PV Modules, Inverters, Cables, Connectors, other ancillary goods as well as supply of designing, engineering, erection, installation and commissioning services of the equipment and material so supplied. Such turnkey contract is for lump sum price. 3. Further, a broad cost structure comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inverters' or any other supply covered under Chapter Heading 84, 85 or 94 of Central Tax Notification, whether the concessional rate of 5% be applicable on the entire value of the contract i.e. supply of SPGS? 4.4 During the personal hearing, it was explained to the Hon'ble Advance Ruling Authority that the issue involved in the case is whether the activity of supply and designing, erection, commissioning and installation of the solar power generating system will fall under SI. No. 234 of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 and hence will be taxable at the rate of 5%. The Hon'ble Authority for Advance Ruling, Haryana vide the impugned Ruling dated 29.8.2018 decided the issue against the Applicant by holding that the above transaction is covered under the scope of 'works contract' and thus taxable 18 %. A copy of the order dated 29.08.2018 has been enclosed as Annexure-3. 4.5 Aggrieved with the order dated 29.08.2019, the Applicant filed an appeal before the Hon'ble Haryana Appellate Authority for Advance Rulings on 02.11.2018. 4.6 Subsequent to the decision of the Hon'ble Authority and filing of the appeal by the Applicant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty percent of the gross consideration charged shall be deemed to be value of the said taxable service. 4.9 Similarly, the Govt., in exercise of the powers conferred by sub-section (1) of Section 9, sub-section (5) of section 15 and sub-section (1) of Section 16 of the CGST Act, 2017 and on the recommendations of the Council, brought amendments in the Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 by way of Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018 (hereinafter referred to as service rate notification). As per the amended Notification dated 31.12.2018 sl no. 38 was inserted, which states as follows: (1) (2) (3) (4) (5) 38 9954 or 9983 or 9987 "Service by way of construction or engineering or installation or other technical services, provided in relation of setting up of following, (a) Bio-gas plant (b) Solar power based devices (c) Solar power generating system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants / devices (f) Ocean waves/tidal waves energy devices/plants Explanation:- This entry shall be read in conjunction with serial number 234 of Schedule 1 of the notification No. 1/2017C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing questions: - a. Classification of any goods or services or both; b. Applicability of a notification issued under the provisions of this Act; c. Determination of time and value of supply of goods or services or both; d. Admissibility of input tax credit of tax paid or deemed to have been paid; e. Determination of the liability to pay tax on any goods or services or both; f. Whether applicant is required to be registered; g. Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. 4.14 The Applicant submits that issue on which advance ruling is sought in the instant matter relates to the classification of goods and services supplied and applicability of SI no. 234 of Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no. 24/2018-Central Tax (Rate) dated 31.12.2018 and SI no. 38 inserted in Notification no. 11/2017-Central Tax (Rate) dated 28.6.2017 vide Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018, on supply and installation of SPGS to its customers. The question relating to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 234 and the value of supply of goods for the purpose ofsl no. 234 shall be deemed as 70% of the gross consideration charged for all such supplies. b. The supply of SPGS along with other goods is taxable @ 5% c. The remaining 30% of the gross consideration charged shall be deemed as value of taxable service. d. The above remaining 30% is covered under SI no. 38 inserted in Notification no. 11/2017- Central Tax (Rate) dated 28.6.2017 vide Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018. e. The supply of service of construction or engineering or installation or other technical service is taxable @ 18%. 6.4 It humbly submitted that the above conditions are satisfied in the instant case in the following manner: i. SPGS proposed to be supplied, erected and commissioned by the Applicant majorly consists of three components namely, a Solar Panel, Solar PCU and Battery Bank. ii. The system also comprises of other equipments viz. MCBs, Energy load meters, LT panels and transformer depending upon the nature of SPGS. These equipments work in tandem with each other to generate the electricity from sunlight and its storage. iii. The contract consists for works per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means of solar cells which convert solar energy directly into electricity (photovoltaic conversion). 6.9 As discussed earlier, SPGS proposed to be erected and commissioned by the Applicant is a combination of Panel of PV Cells, Battery Bank, Solar PCU (also known as Inverter) and other utility equipments and it is used as a system to produce electrical energy using sunlight. 6.10 Thus, the SPGS proposed to the supplied by the Applicant is covered under SI No. 234 of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018. 6.11 In this regard reliance is placed on the Advance Ruling passed by the Hon'ble AARH in the matter of M/s Eastman Auto & Power Ltd. (Advance Ruling No. HAR/HAAR/R/2018-19/06) wherein the issue before the Hon'ble AARH was whether the Solar power packs consisting of Solar PV modules, inverters and battery banks will merit classification under SI. No. 234 of the Notification 1/2017 or not. The Hon'ble AARH after analyzing the provisions, passed the Ruling that supply of solar power packs involving bundled supply of Solar PV modules, inverters and battery banks will quali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of Solar Power Generating System will result into 'Composite Supply' as defined in Section 2 (30) of the Central Goods and Services Tax Act, 2017? (ii) In case the supply of SPGS is treated as 'Composite Supply, whether supply of PV Modules/ Inverters or any other supply covered under Chapter Heading 84, 85 or 94 of Central Tax Notification will be treated as 'Principal Supply?' (iii) In case the principal supply be treated as 'supply of PV Modules/ Inverters' or any other supply covered under Chapter Heading 84, 85 or 94 of Central Tax Notification, whether the concessional rate of 5% be applicable on the entire of value of the contract i.e. supply of SPGS? 7.2 While deciding the said application, the Advance Ruling Authority pronounced its order on 25.07.2018 wherein it observed:- "The applicant poses for us to decide if the Engineering, Procurement and Construction ('EPC') contract falls within the definition of 'composite supply' as found in the GST Act. Since we have elaborately discussed and observed above that the impugned transaction is a "works contract" u/s 2(119) the GST Act, we need not even enter into the discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant or the authorities concerned in terms of Section 103 (2) of the CGST and SGST Acts and the applicant may seek Advance Ruling which will be granted afresh by the Advance Ruling Authority after considering the notifications mentioned in Para above and after giving opportunity of hearing to the appellant. Thus, the order dated 22.08.2018 of the Advance Ruling Authority is quashed and the applicant may approach the Advance Ruling Authority for taking a decision afresh in accordance with law. It is made clear that this authority has not given any opinion on the merits of the case." 7.7 Now, the applicant has approached this Authority seeking a Ruling on its queries mentioned at para 5 of this order. The Authority has gone through the oral as well as written submissions of the applicant and is of the unanimous view that the answers to the queries of applicant are in affirmative. 8. Ruling: (i) The supply of Solar Power Generating System along with other goods and service of designing, erection, commissioning & installation of the same is classified under SI no. 234 of Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no. 24/2018-Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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